Week 8 Flashcards
What statement(s) below capture what Dr. Steven Meyers means by the term “the tyranny of one number”?
I. Fundraisers are often asked to state in one number how much money they raised last year.
II. To give one number as to dollars raised is difficult, when some gifts are current, some are deferred, and some are both contingent and deferred.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
C) Both I and II
The correct answer is C. Both are true. Fundraisers are expected to say in one number how much they raised, but it is difficult to come up with a single number, when some gifts are current, some are set up irrevocably and will come in later, and some are set up so that they may come in later.
With respect to the “design team,” as Dr. Steven Meyers describes it, which of the following statement(s) is (are) true?
I. The nonprofit design team includes the gift planner and others in the charity who are needed to accept the gift, draft the agreement, and carry out the program.
II. The nonprofit design team includes the donor’s most trusted professional advisor.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
A) I only
The correct answer is A. The nonprofit design team, as Meyers describes it, is internal to the charity. Included are representatives of the internal functions needed to get the gift negotiated, accepted, and stewarded.
In Dr. Meyers’ system, during which phase of the personalized planning process is a written proposal to the donor created?
A) during the closing phase
B) during the buy-in phase
C) during the design phase, with the internal design team
D) during discovery with the donor
B) during the buy-in phase
The correct answer is B. During the buy-in phase, the gift planner has already engaged in discovery with the donor; he or she has consulted with the internal design team to see what the nonprofit can do and what they can offer as to terms. The donor has been consulted. Then, during the buy-in, the emerging understanding gets reduced to writing in a gift agreement, often an umbrella gift agreement. That document then gets signed during the closing phase of the process.
Dr. Meyers suggests, in a witty way, that there are four donor types. Which of the four types asks, “What do I get out of this, exactly?”
A) the wise donor
B) the wicked donor
C) the simple donor
D) the naive donor
B) the wicked donor
The correct answer is B. This is a question asked by the “wicked donor.” Such donors are actually excellent prospects for split-interest gifts like CLTs, CRTs, gift annuities, bargain sales, life estate in a residence, or other tools that provide benefits to the donor as well as to the charity.
According to Steven Meyers, conducting a good discovery interview requires “negative capability.” This is an evocative phrase coined by the English poet John Keats. What does the term “negative capability” mean, in the context of a discovery interview?
A) It means to maintain something like what Buddhists call “beginner’s mind” or “mind like water”: no agenda, no pitch, no sales drill, no hurry, just pure, open attention.
B) It means to self-censor thoughts that might interfere with the solicitation process, maintaining attention on the process so that it can be completed successfully within the time allotted.
C) It means to be able to maintain a positive attitude while absorbing and redirecting the negative energy that the donor may radiate.
D) It means possessing the capacity to handle negative thoughts in both the donor and within yourself so that a positive outcome may emerge.
A) It means to maintain something like what Buddhists call “beginner’s mind” or “mind like water”: no agenda, no pitch, no sales drill, no hurry, just pure, open attention.
The correct answer is A. Keats said that negative capability means the capacity to remain in “uncertainties, mysteries, and doubts, without any irritable reaching after facts and reason.” We are listening with a mind like still water. This is a poetic, or elevated, kind of attention that some call “discernment.” There is, as Steven says, no waiting to pounce like a cat on a mouse. This is the mutual attention to the unseen and unknown from which new creation springs as lightning strikes from gathering clouds. To be present at such moments that shape the future and lead to something that may last for generations is a privilege.
Which of the following statements is (are) accurate, with respect to gift agreements?
I. A gift agreement is generally drafted by the client’s attorney.
II. A gift agreement is generally floated to a number of potential charities by the client’s advisors, to see which charity can best meet the donor’s objectives.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
D) Neither I nor II
The correct answer is D. A gift agreement is almost always drafted by the charity. Seldom are these “shopped” by the donor to other charities. Generally, the donor is committed to the organization already, and the process is conducted within the walls of the organization.
In the movie The Matrix, as Steven Meyers recounts it, human beings are kept in pods and their life energy sucked out of them to maintain the “Matrix” – the system which keeps them imprisoned. In light of this analogy, which of the following statement(s) is (are) implied by Dr. Meyers, regarding the gift-planning matrix?
I. The matrix is the artificial and bureaucratic division of gift-planning labor into annual, major, and planned gift silos.
II. The human beings serving the matrix are the fundraisers and the donors.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
C) Both I and II
The correct answer is C. The first statement is certainly true. Meyers may be too tactful to voice the second aloud, but it is clearly implied by his work. He wants to humanize the process for both the donor and the fundraiser, so that the two meet creatively on higher ground to serve the donor, a charity whose mission the donor loves, and the community that both the charity and the donor are committed to serving. This is a true calling, not just a job within a matrix.
Under which of the following arrangements does the donor give the spend annually, while agreeing to give the principal amount later or at death?
A) vicarious endowment
B) virtual endowment
C) equity-building endowment
D) step-up endowment
B) virtual endowment
The correct answer is B. This is a “virtual endowment.” The charity gets the spend needed to fund the program annually, and the principal will arrive later.
Virtual - Give spend rate now, then lump sum later
Equity - Give more than the spend, and pay down the balance gradually
Step-Up - Pay for basic charitable program or project now, while later expecting to step-up to a bigger gift for a bigger opportunity
A named chair generally requires $5 million up front. The spend rate is 4%, which generates $200,000 to fund the chair and expenses. The donor can afford to give $500,000 a year but not $5 million now. The donor is 45 years old and should have a strong cash flow available for many years. What is the gift format that makes the most sense, given this set of facts?
A) endowment
B) virtual endowment
C) equity-building endowment
D) step-up endowment
C) equity-building endowment
The correct answer is C. This is a perfect set of facts for what amounts to an amortization schedule. The total amount to be amortized is the $5 million needed for the chair. The first $200,000 pays the spend for one year. The balance of the $500,000 each year goes to pay off the outstanding balance. This is just like paying off a mortgage by paying more than the interest rate due.
Virtual - Give spend rate now, then lump sum later
Equity - Give more than the spend, and pay down the balance gradually
Step-Up - Pay for basic charitable program or project now, while later expecting to step-up to a bigger gift for a bigger opportunity
Steven Meyers likes to ask, “Why isn’t all philanthropy personalized?” Drawing on the course as a whole, each of these is a reason why personalized philanthropic planning is rare among nonprofit gift officers, EXCEPT
A) lack of interest from high-capacity funders
B) high turnover among fundraisers
C) high turnover among senior leaders in fundraising
D) downward pressure from the board to achieve short-term results
A) lack of interest from high-capacity funders
The correct answer is A. To put the course in a nutshell: highest-capacity donors demand, deserve, and will reward personalized philanthropy provided by a nonprofit gift planner, but the process is resource-intensive and takes time. Boards, having to balance each year’s budget under difficult circumstances, are demanding short-term results, even to the detriment of longer-term relationships and the cultivation of larger future gifts. With that pressure, gift planning cycles are getting shorter. Metrics are forcing short-term gift solicitation in many organizations. This means that often sophisticated gift planning is defaulting to advisors who are increasingly willing and able to plan gifts across the relevant disciplines.
“Crash the fundraising matrix”: Which of the following statement(s) capture(s) what Steven Meyers means by this advice?
I. The distinctions between annual, major, and planned gifts are built into the way nonprofits have traditionally delegated, measured, and managed the work of gift planning.
II. The delegation of labor within annual, major, and planned gift divisions or functions can be a hindrance to a sophisticated gift design, which may include elements of all three.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
C) Both I and II
The correct answer is C. Both statements are true. Meyers is, essentially, trying to work on behalf of the donor and the institution by working within and across the three traditional departments, functions, and silos to create gifts that include elements of all three.
Each of the following illustrates the “tyranny of one number” in nonprofit gift planning, EXCEPT
A) asking a planned gift officer, who also does major gifts, “How much did you raise last year?” and expecting one number in response
B) asking the head of advancement, who oversees annual, major, and planned gift divisions, “How much did advancement raise last year?” and expecting one number in response
C) establishing a campaign to raise $250 million, counting bequest commitments, insurance policies, IRA beneficiary designations, and CRT commitments towards the campaign total, and expressing progress towards that total with one number (as on a fundraising progress thermometer)
D) working backward from a specific amount needed to fund an endowed program (such as a chair), computing the annual spend rate, and then working out a series of payments to provide the spend rate while also eventually paying off the endowed amount
D) working backward from a specific amount needed to fund an endowed program (such as a chair), computing the annual spend rate, and then working out a series of payments to provide the spend rate while also eventually paying off the endowed amount
The correct answer is D. The final example is the kind of thing Dr. Meyers recommends. The endowed amount is known, but the ways to obtain it are many. This is not tyrannical; it is, rather, creative, a way to help the charity with a program that can start right now while giving the donor flexibility as to how that program will be paid up over time. In the other examples, someone who really does not understand the complexities forces a fundraiser or vice president of advancement to respond with one number, even though no single number adequately describes the situation. The National Association of Gift Planners, as we know from another assignment, suggests that rather than using one number to measure campaign totals, the subtotals (outright gifts, deferred irrevocable gifts, and deferred contingent gifts) should be reported separately – not added together.
With respect to the major assumptions of donor-centered fundraising, which of the following statement(s) is (are) true?
I. The fundraiser is a fiduciary for the donor.
II. The fundraiser represents the donor.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
D) Neither I nor II
The correct answer is D. Neither I nor II is true. Financial services are evolving towards a fiduciary standard in which the advisor is expected to serve the client and can be held to a high standard in that respect. The fundraiser, by contrast, is clearly a representative of the charity. The three assumptions or principles of donor-centered philanthropy are as follows:
- People have a natural urge to give.
- The fundraiser should focus on the mission or the cause, not on the needs of the organization or its budget.
- The solicitation should be in proportion to the donor’s means, interests, and inclinations, and it should be conducted without pressure.
These show a focus on the donor and on connecting the donor to a mission, but stop short of suggesting that the fundraiser is working for the donor and is the donor’s legal representative, advisor, or fiduciary.
Which of the following is (are) an assumption of donor-centered fundraising?
I. Donors have a natural urge to give.
II. Donors should be allowed to give without pressure.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
C) Both I and II
The correct answer is C. Both are true. The three main assumptions of donor-centered fundraising are as follows:
- Donors have a natural urge to give.
- The fundraiser should focus on the charity’s mission and results, not on its needs.
- The solicitation should be proportional to the donor’s inclination, interests, needs, and means, and it should be made without pressure.
